Now that we have fully covered financial literacy, it is also imperative that as farmers, we find ways to create passive income streams.
As it stands now, relying on one income stream is no longer deemed sufficient, especially given the current market conditions.
With interest hikes and continuous increases in the prices of everything, added to that the concerns of drought, things are destined to be even harder.
We bore witness to the prices at which farmers have been selling their livestock. Some have called it a complete giveaway and not worth selling. But what can farmers do in the meantime to increase their sources of income, diversify the operation and earn additional income?
Creating passive income as a farmer includes making revenue streams that require minimal ongoing effort or labour-intensive work. The farming business normally requires active involvement and a hands-on approach. There are, however, some strategies that may help farmers generate passive income.
Renting out land
Land is one of the things most farmers are struggling with; thus, if you own
land that is not fully utilised for your farming operations, you can consider renting it out to other farmers or agricultural businesses. This allows
you to generate income from the land without actively farming it yourself, but also it will go a long way in helping other farmers.
Agro-tourism
Does your farm have attractive features, such as natural resources, unique agricultural practices and scenic landscapes, you can explore agro-tourism as a passive income source. Offers may include but are not limited to farm tours, hosting farm stays or events, organising workshops or selling farm-produced goods to visitors.
Farm-based accommodation
Looking at the available spaces on your land, do you perhaps have extra spaces that you can consider converting buildings to or constructing additional structures to offer farm-based accommodation? Offerings could be bed and breakfast facilities, camping sites, vacation rentals and cottages. Platforms like Airbnb can help you market and manage bookings.
Value-added products
Most farmers are still mainly focusing on traditional crop or livestock production, perhaps one may consider adding value to your agricultural products and by-products. Farmers can process and package their produce into value-added products such as jams, preserves, sauces or artisanal goods.
Rental of equipment
Farming machinery can be rented to other farmers or agricultural contractors as well as equipment that is not being used year-round. This leads to optimal usage of machinery, as idle machinery is a lost opportunity and a waste of money.
Livestock or crop share agreements
Farmers can also consider entering into agreements with other farmers or agricultural producers where they share in the profits from their livestock or crop production in exchange for providing access to their land, infrastructure or equipment. These strategies may require some initial investment, planning and marketing efforts. Moreover, regulations, local market conditions and the specific characteristics of your farm, such as commercial farms vs communal farms, will influence the viability of these income streams. Thus, farmers are advised to conduct thorough research and seek professional advice before any of these are undertaken.
Mekupi Kambatuku: Managing Consultant at Simpli Business Advisory